Q1 2020 FINANCIAL RESULTS Cavriago, 15 th May 2020 Agenda LRG - - PowerPoint PPT Presentation

Q1 2020 FINANCIAL RESULTS

Cavriago, 15th May 2020

Agenda

• LRG actions to face the pandemic
• Q1 2020 Financial Results
• Looking ahead

1

A daily management team has been established to set priorities and manage business continuity, looking forward to continue our strategic journey

2

Safeguard health and well-being of our employees Business focus - established a daily management team chaired by the CEO Keep and maintain a constant relationship with our customers and suppliers Go ahead with our R&D projects, with strong focus on CNG/LNG and Hydrogen We expect clean gas-mobility to play a very important role due to the convenient TCO(1) Ensure sustainable operational and financial business continuity SAFE&CEC portfolio is much higher than 2019, with Canada operation always ongoing

(1) Total Cost of Ownership

Agenda

• LRG actions to face the pandemic
• Q1 2020 Financial Results
• Looking ahead

3

Q1 results have been significantly impacted by Covid-19, even if order portfolio “at lockdown” was higher compared to last 3 years

4

Revenues 37,2M€ Liquidity 21,6M€

(*) without IFRS 16 effect

Production value 14,3M€

• Adj. EBITDA

0,3M€ NFP (*) 12,5M€

Landi Renzo Group SAFE&CEC

Net Income

• 1,4M€

NFP (*) 63,5M€

• Adj. EBITDA

2,9M€

w/o Covid-19 Revenues at 45,0M€

(7,8M€ of orders not shipped because of lockdown)

• Adj. EBIT
• 0,2M€
• Covid-19 impacted significantly on

Q1 volumes, working capital and net financial position

• LRG Revenues impacted by

temporary production stoppage and demand disruption in all regions related to pandemic

• Strategic initiatives implemented

to ensure sustainable operational and business continuity (15% SG&A cost reduction on annual basis)

• The Group enter the “crisis” with a

very strong liquidity position

• R&D activities have been regularly

carried on during the lockdown period

• SAFE&CEC Q1 in line with 2019

even if Italian operational performance has been impacted. Overall the Group confirms the growing trend with positive outlook

Q1 Highlights

Investments 2,8M€ Liquidity 2,5M€

(*) without IFRS 16 effect

Order portfolio on Q1 was higher than expectation, confirming the strong market positioning. Important recognition to our R&D in Italy and US

5

• First

quarter

• rder

portfolio, until the emergence of the Covid-19 crisis, was higher than 2019 and budget expectations

• As a consequence of the lockdown:
• European and Chinese OEMs decided to

shut down all plants in March and April with a consequent drop of orders

• Main

AM Counties adopted stringent confinement regulation that prevented any commercial activity

• By the end of the quarter, Landi Renzo

cumulated about 7,8M€ of unclaimed or postponed orders that had been already produced to meet expected demand

• Landi Renzo has been awarded:
• a funding of 1,3M€ by the Region

Emilia-Romagna for the next two years to develop innovative components for hydrogen-powered systems with the goal of introducing new products and services and sustaining investments and production capacity at regional level

• Landi USA has been awarded by a

600K$ grant from South Coast AQMD and SoCalGas for the development of a new “near-zero emission” natural gas Heavy Duty engine

• Current R&D programs have been regularly

carried on during the lockdown period, with positive recognition of our new HD product portfolio both in China and India Sales & Operations activities R&D activities

In the global scenario, the automotive business fell by -27,1% on Q1 2020

6

3,9 3,3 3,0 1,4 4,3 2,5 11,2 7,2

• 15,9%
• 53,4%
• 41,4%
• 35,7%

Asia&RoW America Europe

(excl.Italy)

1,4 1,3 1,3 1,1 2,0 1,3 4,7 3,7

• 5,6%
• 18,9%
• 35,8%
• 22,4%

1,7 1,6 1,8 2,0 2,3 1,4 5,8 5,0

• 3,6%

+7,1%

• 37,3%
• 13,5%

0,2 0,2 0,2 0,2 0,2 0,0 0,5 0,3

• 5,5%
• 7,9%
• 85,4%
• 35,2%

Italy Highlights PC sales volumes (million units)

2019 2020

January February March Q1

Source: LR elaboration on Roland Berger and AlixPartners research documents 7,1 6,3 6,3 4,6 8,8 5,3 22,2 16,2

• 10,7%
• 27,3%
• 40,0%
• 27,1%

Global

pandemic started in China

• All major OEMs have shut down their manufacturing facilities due to lockdown measures, limited parts supply and just-in-

time production strategy. OEMs and Tier1 re-started at the end of April. Most of our reference market in AM were in lockdown starting from mid of March

• Oil price collapsed to lowest level since 2002 due to the slowdown and interruption in the worldwide production activities
• Currencies related to our sales (mainly in all LatAm) have depreciated against the Euro in the last two months, with a

direct impact of our revenues

7

Q1 2020 Net Sales down by 15,1% versus a market decline of 27,1%

Sector

• Landi

Renzo confirms its position as the top OEM “tier- 1” supplier in Europe

• OEM/AM share in line with last

year Q1

Region

Covid-19 crisis impact in all regions:

• Europe

and Italy mainly addicted to OEM plant production shutdowns

• America

revenues slightly down also due to Brazilian market and lockdown of Peru and Colombia

• Asia&RoW revenues strongly

impacted by the Covid-19 crisis

Italy Europe

(excl.Italy)

America Asia&RoW

• 24,8%
• 8,5%
• 6,6%
• 26,9%

8,8 6,6 22,5 20,5 4,1 3,9 8,4 6,1 Q1 ’19 Q1 ’20 Q1 ’20 Q1 ’19 Q1 ’20 Q1 ’19 Q1 ’19 Q1 ’20

53,7% AM 46,3% OEM

17,9% 55,3% 10,3% 16,5%

M€

Highlights

Q1 results show an Adjusted EBIT at break-even despite volumes significantly impacted by Covid-19

8

M€; % 43,8 5,4 37,2 2,4 EBITDA Revenues 5,4 2,9

• Adj. EBITDA

12,4% 6,6% % on rev. 12,4% 7,8% % on rev.

2019 Q1 2020 Q1

• 6,6
• 3,0
• 2,5

delta

• 15,1%
• 55,1%
• 47,0%

delta %

• Revenues impacted by lockdown due to Covid-19,

that affected all regions, by 7,8M€ of orders not shipped in Q1

• Considering Q1 orders not shipped due to

Covid-19 crisis, Q1 revenues would have been 45,0M€ - higher by 2,7% compared to last year

• Adj.

EBITDA positively affected by a continued reduction of fixed costs (0,3M€). Lower profitability is mainly due to a different and unfavourable sales mix in OEM in addition to a price reduction in AM required to remain competitive in the changing environment

• conditions. Net of Covid-19 Adj. EBITDA would have

been in line with 2019 and better than expectations

• FY 2019 Net Result (-1,4M€) decreased by 2M€

compared to last year also due to a unfavourable effect of currency exchange 2,3

• 0,2
• Adj. EBIT

5,2%

• 0,4%

% on rev.

• 2,5

n.a.

2,3

• 0,6

EBIT

5,2%

• 1,6%

% on rev.

• 2,9

n.a.

1,5

• 1,6

EBT

3,3%

• 4,2%

% on rev.

• 3,1

n.a.

0,6

• 1,4

Net Result

• 2,0

n.a.

*

M€

Pandemic impacts on worldwide market conditions. Cost control partially mitigates the effect of the shrinking business

9

5,4 2,9 0,3

• Adj. EBITDA

Q1 2020 Margin effect

• Adj. EBITDA

Q1 2019 Volume effect Overhead and Payroll

• 1,6
• 1,2

Adj. EBITDA Q1 2020

• Q1 2019

Working Capital

(1) Automotive sector

17,3 18,9 27,2

28,9 33,8

2019 at 31.12 2017 at 31.12 2018 at 31.12 2020 at 31.03 2019 at 31.03

18,3%

15,1% 10,3% 10,0% 14,4%

• Adj. EBITDA decreased by 2,5M€ compared to

last year:

• Effect of lower volumes and of change in

sales mix impacting by 2,8M€

• Positively affected by a continued reduction
• f fixed costs 0,3M€

Highlights

• Working Capital at 18,3%, strongly impacted

by an increase of inventories due to sales orders not shipped, because of Covid-19, with an impact of ~5M€ and advanced purchases to manage risks of materials lack for 1,1M€. Net of Covid DIOH would have been better than Q1 2019

31.03 2019 FY 2019 31.03 2020 DSO 67 77 75 DPO 127 137 135 DIOH 81 76 95 (79 net of Covid-19)

NFP impacted by the expansion of working capital and by investments in R&D to support new products development for the HD segment

10

• 0,4
• 4,9
• 2,4
• 6,3

NFP 2019 (net of IFRS16)

Q1 ’20 Ebitda

• Extr. Costs

Working Capital

• 3,4

NFP 2020 at 31.03 (net of IFRS16 and derivatives)

CapEx (a) and Leasing payment (b) Financials, Taxes &

• thers

IFRS16 effect

NFP 2020 at 31.03

• 55,2

2,9

• 63,5
• 69,8

M€

Cash from ordinary activities

• 8,3M€

2019 NFP 2020 at 31th March

22,7 Cash liquidity (+) 21,6 2,8 Current Financial Assets (+) 2,8

• 29,7 (2)

Short-term debts (-)

• 34,5 (2)
• 51,0

Long-term debts (-)

• 53,4
• 55,2

NFP net of IFRS 16

• 63,5
• 6,6 (3)

Financial Lease (-)

• 6,3 (3)
• 61,8

NFP (1)

• 69,8

(1) Short and long terms debt and bond are inclusive of amortized cost effect (2) Accrued interests included (3) Financial liability related to first time adoption of IFRS 16 – Leases and derivatives

SAFE&CEC: strong turnover growth (+14,7%), while Adj. EBITDA is impacted by Covid-19 because of delay in WIP completion in Italy

11

• Q1 2020 consolidated value of production

reached 14,3 M€, confirming the growing trend in volumes already seen in FY2019. due to Italian plant shutdown the Group has delays the completion of some orders still on WIP at end of the quarter, while Canadian operation has continue to operate as usual

• Adj. EBITDA in line with previous year
• Net Result is slightly positive, vs a net loss in

Q1 2019

• Despite having been impacted by Covid-19 in

Italy (WIP), the Company has maintained working capital at 20,3% of value of production, and it is working to optimize

Highlights

SAFE&CEC

M€; % 12,4 0,3 14,3 0,3

• Adj. EBITDA

Value of Production

2,7% 1,9% % on Value of Product.

2019 Q1 2020 Q1

1,8 0,0

delta

14,7% 0,0%

delta %

• 0,3

0,0 Net Result

0,3

n.a.

15,2 15,2 Working Capital

0,0

20,7% 20,3% % on Value of Product.

Agenda

• LRG actions to face the pandemic
• Q1 2020 Financial Results
• Looking ahead

12

We are committed to emerge stronger from the current situation, also leveraging our experience in managing complex situation

13

• Ongoing safety and well being of
• ur employees
• Adoption of smart and new way of

working for all the employees SAFETY & WELFARE

• Guarantee the continuity of

production in compliance with safety standards

• Ensure new product development

activities OPERATIONS & R&D

• Costs savings, with non essential

services postponed or eliminated (SG&A reduced by more than 15% on annual basis)

• Working Capital optimization to

preserve liquidity, also thanks to team expertise

• Focus on strategic investments

PROFIT & LIQUIDITY

• Support our dealer network to

facilitate recovery phase and respond effectively to the consumer demand

• Study new special initiatives to boost

the sale recovery in H2

• Coordinate suppliers and align the

supply base schedule to ensure continuity of production CUSTOMERS & SUPPLY CHAIN

Landi Renzo Group special opportunities

14

• Sustainability has emerged even more important after the pandemic, even because of many signs of correlation

between air quality and Covid-19 spread, with gas-mobility as immediate economically sustainable solution to improve air quality worldwide

• There are sign of postponement of Euro7 as well as delay of e-mobility growth in Europe, that would positively impact
• n gas-mobility growth
• Typically during economic downturn people look for solution that help to reduce cost, we expect a growth in AM

conversion and in new OEM sales of gas vehicles as soon as mobility will re-start

• The lockdown and the general delay in many projects gives us the opportunities to be better positioned in HDs and

Hydrogen as soon as “market” will re-start, as well as the opportunities to value our enter in e-mobility for mid-duty, also through the development of solutions that bring together gas and electrical

Arising Market opportunities in Automotive

Although the current emergency situation has inevitably affected our business, we are deeply committed to emerge from this crisis stronger and more efficient. In particular, we will continue to invest in our future growth and we are optimistic that we will be better positioned than ever after this pandemic to achieve our long-term potential

SAFE&CEC 2020 perspective has been less impacted by Covid-19, also thanks to the strategic agreement in Egypt and strong market positioning

15

• New strategic plan is ongoing and will be

completed by mid-June

• First quarter order portfolio higher than 2019

and budget expectations

SAFE&CEC

• Revenues are expected in line with 2019, with

improvement in profitability Operations activities Strategic Initiatives

• in our consolidated market many opportunities

are still arising in Europe, Canada and Euroasia

• New growth opportunities from Hydrogen

compression, biomethane application and new approach to service

• Ongoing reinforcement of Management team

to support the growth perspective

• Very positive perspective for high value

creation even in the short term 42,9 53,9 Week 19th 2020 Week 19th 2019 25,6% Revenues & Order Book (M€)

APPENDIX

INVESTOR RELATIONS TOP MANAGERS

Paolo Cilloni

CFO & IR

SHAREHOLDING SHARE INFORMATION BOARD OF DIRECTORS

Stefano Landi – Chairman Giovannina Domenichini – Honorary Chairman Cristiano Musi - CEO Angelo Iori – Director Silvia Landi - Director Anton Karl – Independent Director Sara Fornasiero - Independent Director Vincenzo Russi – Independent Director Paolo Ferrero - Director

Stefano Landi

Chairman

Cristiano Musi

CEO

Investor Relations Contacts: Paolo Cilloni Tel: +39 0522 9433 E-mail: ir@landi.it www.landirenzogroup.com

FTSE Italia STAR

• N. of shares outstanding: 112.500.000

Price as of 14/05/2020 € 0.538

Paolo Ferrero

Global Sales & Marketing and Strategic Business Development Director

Landi Renzo - Company profile (14/05/2020)

17

Gianfranco Malvicini

Group COO

Domenico Verrastro

R&D Director

CONSOLIDATED P&L

18

(thousands of Euro) CONSOLIDATED INCOME STATEMENT 31/03/2020 31/03/2019 Revenues from sales and services 37,170 43,798 Other revenue and income 51 203 Cost of raw materials, consumables and goods and change in inventories

• 19,445
• 22,806

Costs for services and use of third party assets

• 8,567
• 8,487

Personnel expenses

• 6,263
• 6,727

Accruals, impairment losses and other operating expenses

• 506
• 542

Gross Operating Profit 2,440 5,439 Amortization, depreciation and impairment losses

• 3,043
• 3,164

Net Operating Profit

• 603

2,275 Financial income 30 19 Financial expenses

• 738
• 920

Exchange gains (losses)

• 261

192 Gains (Losses) on joint venture valuate using the equity method 21

• 110

Profit (Loss) before taxes

• 1,551

1,456 Taxes 177

• 866

Net profit (Loss) for the Group and minority interests, including:

• 1,374

590 Minority interests

• 6
• 13

Net profit (Loss) for the Group

• 1,368

603 Basic earnings (loss) per share (calculated on 112,500,000 shares)

• 0.0122

0.0054 Diluted earnings (loss) per share

• 0.0122

0.0054

CONSOLIDATED BALANCE SHEET

19

(thousands of Euro) ASSETS 31/03/2020 31/12/2019 Non-current assets Property, plant and equipment 11,924 11,578 Development expenditure 8,488 8,228 Goodw ill 30,094 30,094 Other intangible assets w ith definite useful lives 12,288 12,536 Right-of-use assets 6,056 6,402 Investments in associated companies and joint ventures 22,378 23,530 Other non-current financial assets 335 334 Other non-current assets 3,420 3,420 Deferred tax assets 8,918 8,704 Total non-current assets 103,901 104,826 Current assets Trade receivables 38,027 40,545 Inventories 48,064 39,774 Other receivables and current assets 8,721 7,337 Current financial assets 2,822 2,801 Cash and cash equivalents 21,648 22,650 Total current assets 119,282 113,107 TOTAL ASSETS 223,183 217,933

CONSOLIDATED BALANCE SHEET

20

(thousands of Euro) SHAREHOLDERS' EQUITY AND LIABILITIES 31/03/2020 31/12/2019 Shareholders’ Equity Share capital 11,250 11,250 Other reserves 53,276 49,367 Profit (Loss) of the period

• 1,368

6,048 Total Shareholders' Equity of the Group 63,158 66,665 Minority interests

• 319
• 332

TOTAL SHAREHOLDERS' EQUITY 62,839 66,333 Non-current liabilities Non-current bank loans 53,396 50,991 Non-current liabilities for right-of-use 4,193 4,535 Provisions for risks and charges 3,139 3,609 Defined benefit plans for employees 1,560 1,630 Deferred tax liabilities 356 407 Liabilities for derivative financial instruments 159 30 Total non-current liabilities 62,803 61,202 Current liabilities Bank overdrafts and short-term loans 34,335 29,460 Other current financial liabilities 210 210 Current liabilities for right-of-use 1,988 1,992 Trade payables 54,348 51,935 Tax liabilities 1,645 2,134 Other current liabilities 5,015 4,667 Total current liabilities 97,541 90,398 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 223,183 217,933

2020 Corporate financial agenda

21

March 13

FY 2019 FINANCIAL RESULTS

May 15 September 11 November 13

Q1 2020 FINANCIAL RESULTS Half Year 2020 FINANCIAL RESULTS Q3 2020 FINANCIAL RESULTS

This document has been prepared by Landi Renzo S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the “Group”), as well as any of their directors, officers, employees, advisers or agents (the “Group Representatives”) accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written,

• ral or in visual or electronic form, transmitted or made available. This document may contain forward-looking statements about the Company

and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are

• utside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual

future results. The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward looking statements. Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations

Disclaimer

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